CHACKO PYLEE Vs. MADHAVI AMMA
HIGH COURT OF KERALA
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(1.)This Civil Revision Petition arises from proceedings under the Kerala Agriculturists Debt Relief Act, 31 of 1958. We shall for convenience refer to the parties as mortgagor and mortgagee. The petition in the Trial Court was by the mortgagor who is the petitioner before us. He had executed a usufructuary mortgage to the respondent mortgage for Rs. 600/- and had taken the property back on lease. A decree was obtained by the mortgagee in O. S. No. 103 of 1954 for recovery of arrears of rent. The mortgagor has paid Rs. 963.93 towares rent. According to the mortgagor the transaction was to be viewed as a simple mortgage under S.11(6) of Act 31 of 1958 and the debt treated as discharged as more than the principal and a moiety thereof had been paid by him. The mortgagee contended that a sum of Rs. 591.63 was still due to her. The Trial Court upheld the mortgagor's contention and allowed the petition declaring that the whole debt was discharged by payments made by the mortgagor. On appeal by the mortgagee the learned District Judge of Ernakulam held that S.5 of the Act could apply only if more than a moiety of the principal was outstanding as interest on the date of the Act and that payments appropriated by the mortgagee towards rent could not be reopened. The order of the Trial Court was accordingly set aside and the petition was remanded for fresh disposal.
(2.)Miss Annamma Alexander, counsel for the petitioner, contended that whatever may have been the position before Act 31 of 1958 was amended, the view of the lower appellate court could not be sustained after S.5 of the Act was amended by Act 2 of 1961. S.11 contains special provisions regarding usufructuary mortgages by agriculturists and Clause.6 of the section provides:
"(6) Nothing contained in sub-s.(2) to (5) shall apply to mortgages where the property mortgaged has been leased back to the mortgagor by the mortgagee and to such mortgages the following provisions shall apply.
(a) the mortgage shall be deemed to be a simple mortgage from the date of the lease back and the provisions of this Act shall apply to the debt covered by the mortgage;
(b) the interest payable on the mortgage amount after the commencement of this Act shall be at five per cent per annum."
The relevant provisions of S.5 are extracted below:
"5. (1)(a) For determining the amount of the debt other than a debt due to a banking company as defined in the Banking Companies Act, 1949, for the purpose of payment under this Act, notwithstanding anything contained in any law, contract or decree or order of court,
(i) interest shall be calculated at the rate applicable to the debt under the law, custom, contract or decree or order of court under which it arises or at five per cent per annum simple interest, whichever is less, and credit shall be given for all sums paid or credited towards interest and only such amount as is found outstanding, if any, as interest thus calculated, shall be deemed payable together with the principal amount or such portion of it as is due; and
(ii) notwithstanding anything in clause (i) not more than one half of the principal shall be deemed payable or to have been payable towards interest which accrued due till the commencement of this Act.
If the amount paid or credited towards interest exceeds the amount payable under clause (i) or clause (ii) such excess shall be credited towards the principal and the balance, if any, and future interest alone shall be recoverable.
(b) For determining the amount of a debt due to a banking company as defined in the Banking Companies Act, 1949, f or the purpose of payment under this Act, notwithstanding anything contained in any law, contract or decree or order of court,
(i) interest shall be calculated at the rate applicable to the debt under the law, contract or decree or order of court under which it arises or at five per cent per annum simple interest, whichever is less, up to the date of publication in the Gazette of the Kerala Agriculturists Debt Relief (Amendment) Act, 1960, and at the rate applicable to the debt under the law, contract or decree or order of court under which it arises or at seven per cent per annum simple interest, whichever is less, with effect on and from the date of the publication in the Gazette of the said Act; but nothing in this clause shall be deemed to require a reappropriation of interest already paid and credited before the said date of publication;
(ii) not more than one half of the principal shall be payable towards interest which accrued due till the commencement of this Act.
x x x x x"
(clause (2) is omitted as it not relevant)
(3.)S.11 (6) provides that all the provisions of the Act shall apply to a case of a mortgage and lease back which is to be treated as a simple mortgage for the purpose of the Act. This should necessarily include S.5 also according to which the sum due at the commencement of the Act is limited to the principal and a moiety thereof, inclusive of payments made before the commencement of the Act.
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